FCC MB May Decide on Stolz Deal by Nov. 30

“No part of this Receivership is on the level,” emailed Stolz. He unsuccessfully challenged the receivership and related court judgments in multiple venues, including a pending proceeding (on Pacer) at the 9th U.S. Circuit Court of Appeals.

FM stations KFRH North Las Vegas, KREV Alameda, California, and KRCK Mecca, California, were put into receivership after Stolz didn’t initially pay a $1.3 million judgment against him over music licensing violations, a verdict Stolz has repeatedly appealed. He has had a contentious history with the FCC -- in 2019, commissioners voted to reject numerous appeals on Entercom’s buy of CBS radio stations because of his repetitive filings. “Although we find that denial of the Petition by the Bureau, rather than the Commission, would have been appropriate under section 1.106(p) of the Rules, we have decided to act on the Petition in order to discourage any further requests for reconsideration or review,” said the FCC then (see 1907080069). “I am considering all legal options going forward,” Stolz emailed Wednesday.

The Media Bureau told Patrick about the Nov. 30 deadline in an email Tuesday. The proposed deal has been before the agency for over nine months, and was the subject of a call with Patrick, VCY, bureau Chief Michelle Carey and Audio Division Chief Albert Shuldiner last week. “The FCC’s inaction is the only thing standing in the way of Mr. Patrick’s sale of the Stations,” said the ex parte filing. It quotes U.S. District Court Judge Jesus Bernal, who ordered the receivership, as urging the FCC to authorize the sale so the receivership can end. “Enough is enough,” Bernal wrote. Stolz asked the FCC to either reject the sale or take no action. “The notion that a hasty grant of the Application would be 'just and proper' is incorrect,” said the filing.

Stolz argued in a September the agency would be wrong to decide with court proceedings pending, and dismissed Bernal’s comments. “Applicants are opportunistically seizing on the Judge’s exclamation as if it represented a final adjudication,” said the filing from Stolz’s company, Royce International Broadcasting. The FCC declined comment.

Stolz eventually paid the initial judgment of $1.3 million, but since the receivership was ordered in 2019, the amount required to satisfy the receivership increased as additional parties with claims on Stolz joined the case. Additionally, fees for Patrick and attorneys Patrick hired to deal with Stolz’s appeals piled up. Stolz has paid close to $500,000 to resolve secondary judgments, not enough to satisfy the receivership, he told the 9th Circuit. The sale of the stations will provide the funds to pay off the receivership and close the matter, Patrick said.

Legal Fees

“I do not understand why this Receivership is still open. I paid the judgment 7 weeks before Patrick sold the stations,” Stolz emailed. In his latest appeal before the 9th Circuit, Stolz argued it's unprecedented to keep receivership after a judgment is paid. The final amount required to satisfy the receivership is based on Patrick’s fees and attorney charges and “depends on what motions you file or don't file or what challenges you bring or don't bring because those motions incur fees,” Bernal told Stolz’s attorney in a court transcript Patrick and VCY submitted to the FCC. “If you had just stopped, then it would all have been over by now.”

“That Royce has not laid down to passively accept the destruction of its business, but has actively challenged matters that it believes to be unlawful should not be held against it,” Stolz told the FCC. Patrick and Stolz both predicted the remaining fees will be $1 million or more.

Stolz argued the VCY deal undervalues the stations: “Patrick is gutting my business. According to our experts, $5,000/month for 3 FM Radio Stations is less than 1/20 of the market price.” An attorney for Stolz told the 9th Circuit the three stations were worth $30 million. Patrick, who owns numerous other stations, said the stations had one employee among them, numerous technical problems and virtually no advertising when he took over. A cash deal with a religious broadcaster -- which doesn’t depend on advertising in its business model -- was the best offer he could find. “I get a brokerage fee on the sale of these stations; it is in my interest to make the best deal I can,” he said.

Stolz said Patrick delayed disbursing the $1.3 million as an excuse to sell the stations, and he invited additional non-interested parties into the case to file claims against Stolz that the court eventually threw out. Patrick said entities owed money by Stolz, such as unpaid broadcast tower owners, sought him out as the receiver, and said the court was in charge of disbursing fees. At least one of the entities seeking funds from Stolz was one of his prior attorneys involved in the case, according to court filings.

The FCC delaying ruling on a case with pending litigation isn’t unusual, broadcast attorneys said, but conceded it could be enhanced here by Stolz’s history of litigation and repeated filings. Stolz didn’t comment on whether his previous dealings with the FCC could affect this proceeding. Press Communications CEO Robert McAllen, who also repeatedly has been on the other side of court battles with the FCC, said he still has disagreements with the agency, but it always treated him fairly “on the technical side.”